You Need a Budget (YNAB) 3.0 Personal Finance Software Review

Just yesterday You Need a Budget 3.0 (Open Beta) was released into the wild so I upgraded immediately. I know it’s sad, but it was almost as if I got an early Christmas present. I use YNAB Pro almost on a daily basis and have for about a year solid. It’s worked great for me keeping us right on budget and has been incredibly solid tracking our expenses and income. So when I heard there was a beta coming I waited with excitement at a face lift to my much loved finance software. Well I fired it up today and the first thing you’ll notice is that it runs on Adobe Air. What’s that got to do with anything? Well what it means is that this software is equally at home running on your Windows 7, Vista, XP PC as well as your Mac or even your Linux machine. This is a big deal as previously it only ran in the Microsoft Windows world. After clicking around and looking at the new and shiny parts I really started to see that this was much more than just a face lift, this is a full foundation rebuild and then some.

What is You Need a Budget 3.0 Pro?

If you are not familiar with YNAB it’s essentially a standalone software package devoted to budgeting and income/expense tracking. It’s beauty is that it’s fully centered around the zero based budget. You enter in your income for the month and then work backwards allocating your money in your different categories until you’ve given all of your money it’s job for the month. Those interested in paying yourself first, should be all over this. Okay enough about the background let’s look at the features.

YNAB 3.0 Unboxing

Okay didn’t come in a box, it was a download but I think it’s wasteful to have all that packaging just so they could give you a DVD and some sales propaganda. I’m happy with the download. When 3.0 goes out of beta they should have options for ordering a DVD if you are so inclined. If you’ve used earlier versions of YNAB it’s a piece of cake to just open your previous data file and you’re good to go.

Documentation

Obviously since it’s a download you’re not getting a printed manual or anything of the sort so you’ll have to resort to the help built in or you can watch a variety of videos on the YNAB website. Also as part of the package you get access to free live online YNAB coaching as much as you want witha live Q&A session at the end. That’s a pretty fantastic deal with software that’s pretty easy to use anyways. On top of that the Quick Help located in the bottom left corner can certainly help walk you along. For a product that is supposed to be a beta the help is all there. I wish the same could be said for Quicken 2010. Intuit are you listening?

YNAB 3.0 Accounts

This is analagous to a check register where you’ll enter your income and expenses. If you ever used MS Money, or Quicken this will look very familiar to you. Enter in the date of your transaction, the payee name, the category, any memo you would like to enter and the amount as an inflow or outflow. We’ll take about categories a bit more in the budgeting section.

Register New Features

Some of the new features in the register includes the ability to search your accounts for specific transactions. So now if you want to see every time you’ve shopped at the yarn barn, type that in the search box and you’ll see them all. Also now on the same page as the register is the scheduled transactions so you can see what may be coming down the road and add right from the register. Very handy. Also by clicking on the little gear icon in the right corner there’s the option to turn on a running balance or turn off some of the categories.

And finally now there is a separate field for keeping track of the check # if you actually use checks any more. This is fantastic and just really is an elegant interface compared to YNAB 2.

Syncing YNAB 3 with your Bank or Credit Union

You Need a Budget can import your financial institutions transactions using most any file format from Quicken, MS Money or comma delimited. You just need to download those transactions from your banks online system yourself and then YNAB will open the file. There is still no option for YNAB to contact your bank directly for you. This really is not too much of an issue unless you have 15 different accounts then it could quickly become cumbersome.

You Need a Budget 3.0 – Budget Window

This is the very nerve center of YNAB and why in my opinion it’s got Quicken beat hands down. It’s personal finance software built around a budget, not financial tracking software with a budget component. There is a lot to like in this new version. We’ll break it down.

Budget Categories

You setup your budget by defining Master Categories. These are your buckets for expenses. I have such master categories as Giving, Saving, Housing, Utilities, Food, Transportation, Clothing, Personal, Recreation and Debts. Under each master category you can create as many sub categories as you need. The best part about this new version is that you can drag your categories and arrange them however you want. In the older versions it would sort alphabetically by master category. I had to orient them the way I wanted by naming my categories: 1.Giving, 2.Saving and so on, now I can drop the numbers and arrange how I want. Once you have your categories setup you define your budgeted dollar amounts for each category.

Budgeting

The budgeting window has definitely been upgraded it now includes some more information including your starting YNAB buffer, Overspending, Income available next month and your Available to Budget amount. New to 3.0 is the ability to assign any overspending to the month back to that specific category for next month. It used to be that money was just taken out of the next months total Available Funds. So when you eat out too much this month maybe you choose to eat out less next month for instance.

As always YNAB has category balances which means from month to month you can carry a balance in specific categories rather than resetting them each month. This is a critical feature that most other finance programs have missed. This can be called variable categories or sinking funds. This is when you have traded your budgeting white belt in for your yellow belt. Now you are saving monthly for Christmas for instance so when December 25th rolls around you’ve got it covered and the money is there.

Quick Budget

Also a new feature the Quick Budget helps you to setup your dollar amounts in your various categories either using the previous months budget values, last months outflows, this months scheduled outflows or it can calculate an average of your budget spending over months if you have that data in YNAB. Some helpful little tricks.

YNAB Reporting

Previous versions of YNAB included only the most simple of reporting with no customization. YNAB 3.0 has a variety of reporting that you can customize by categories, time periods including spending and Net Worth. You can also export your data in CVS file that you can import in a spreadsheet program such as MS Excel. Much much improved over the previous version. Don’t expect though that you are going to generate your small business profit and loss statements or other advanced reporting this is really focused on personal spending reporting. For that it does an adequate job.

You Need a Budget 3 Review Wrap-Up and Recommendations

Who’s It For?

YNAB 3 is for anyone who wants to focus their finances soundly on a budget and track their income and expenses from month to month. If you have used Quicken or MS Money and the past and just felt overwhelmed by all of the extraneous tools and options this is a great choice for you.

If you use older versions of YNAB I highly recommend the upgrade. The move to the Adobe Air platform means that YNAB is equally suitable for Windows, Mac and Linux users so OS choice is no longer an issue.

Who’s It Not For?

If you are looking for an all in one software for managing your budget and expenses as well as investment tracking then this is not going to do it for you. There is only the most basic support for tracking your investments and it’s all manual. Also if you must absolutely have automatic account transaction downloads then you’ll need to look elsewhere. You have to manually import the transaction files into YNAB.

My Recommendation

Alright I admit it I might be biased since I’ve been using YNAB for a while but I think you cannot go wrong with this program. If you want the most solid budgeting software out there this is it. Yes I would love it if they expanded and put in investment tracking to give Quicken a run for it’s money but I’ll settle for a solid budgeting platform. If you own previous versions and already like it, you need to upgrade no question. It’s that much better.

Where to Buy

Oh right how much does it cost? Well since they are in an open beta it’s a reduced upgrade price based on the following table.If you buy the beta you can upgrade for free to the retail release when it comes out shortly. Once the public beta testing is complete YNAB 3 will retail for $59.95. If you’ve never used YNAB before you can just purchase the current released version and when it’s released you can upgrade to YNAB 3 for free. Purchase at the YNAB Website.

YNAB3 has not truly been “released” yet! They have cruelly decided to dribble out special “invitations” to get the beta. They seemed to have done this to avoid a deluge of bug reports, questions, etc. In other words, many have signed up to PURCHASE and test the beta, yet rather than put the customer first, they restrict access to the invites for their benefit of comfort and ease. Maybe you had to have followed the great anticipation of this beta ‘release’ to understand. Maybe I’m too much of a budget nerd. But I can’t help but feel kicked in the seat by the YNAB company.

Reading YNAB’s tweets (@jessemecham), it sounds like he’s been hard at work trying to get the invite emails sent out. Though I agree–maybe there was a more efficient way to release it simultaneously.
.-= Wojciech Kulicki´s last blog ..A Personal Finance Reading List =-.

I’m so happy to see companies extend beyond the walls of Windows. So many people are moving from Windows to Linux and Mac but the only problem with that is the majority of software is designed just for Windows. Way to go YNAB! And a great review, Paul.
.-= Jesse´s last blog ..More Ways to Save During the Holidays =-.

I use Mint.com and love it. It’s simple, requires no work to maintain, and helps with my budgeting as well getting a good overview of my finances. What’s the most significant improvement of YNAB over Mint? Is it worth the money?
.-= Daniel´s last blog ..Credit Series: Why Credit Matters =-.

Mint is definitely bringing in some of the features that really made YNAB compelling, especially the month to month budget carryover. At this point the key difference is online vs. standalone. Also if your core work is focused on the budget IMHO YNAB is much much better. YNAB gives you a 2 week free trial so you can check it out for yourself. I personally hate the idea that one source has access to all of my financial information and that’s what’s kept me away from Mint and some of the other online services at large.

Guys, I’ve been trying to get Mint working for a week. It will not connect to my primary bank, even though it is a supported bank. And the customer service is almost insulting. No phone number to call, just a contact form to fill out – then wait 19 hours for a response as helpful as “your user name is incorrect” (even though the user name works on the bank’s actual web site.

I love the features and would love to use Mint, but it’s worthless if you can’t use it with your main bank account.

150% YNAB 3. I use it constantly and it’s late beta version is still more solid than the released version of Quicken 2010. There I try and be relatively diplomatic about the two but I’ll admit that I love YNAB. You can always try YNAB for free and see if you like it, Quicken you don’t have that option.

I now have Quicken Essentials for Mac (new user to Quicken). I’m disappointed in the budgeting aspect and am interested in YNAB 3.0. I’ve seen it mentioned tat YNAB 3.0 doesn’t connect directly to my bank but it should be easy to use Quicken to create an import file for YNAB 3.0. I don’t see ANY option to export data from Quicken Essentials for Mac so how would the import to YNAB 3.0 be accomplished. I’d like to know before investing in yet another financial app.

I just heard of YNAB on the MSN Money websites and I was thinking of trying it. I googled for actual reviews of the product and this one came up. After reading your obviously knowledgeable and well thought out review I’ve decided this is a good use of 60 of my dollars! I am looking forward to d/l it tonight on my home computer and giving it a try. Thanks for taking the time to review and share your expertise!

Paul, great review. I was about to buy Quicken Essentials for Mac before reading this. I have never heard of YNAB before this. My big question is in regards to the budgeting component…can I designate the dates of the month? We budget from the 15th of the month to the 14th of the next month as my husband is in sales and receives his larger commission check on the 15th and does not know that amount until after the previous month closes out. We have used Dave Ramsey’s Total Money Makeover Gazelle Budget for keeping track of our zero based budget and it allows you to do that but cannot upload our transactions without a windows based file. Additionally, I need something that I can track my actual categories and with basic reporting to print for tax time. Does YNAB give me those options?

Quick question, I have been using Quicken since atleat 1999. I have to reload my 2008 verision, which is why I decided to investigate another package. Is there a way to download my info from Quicken to YNAB. I really don’t want to start from scratch.

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To Viki K.
I’ve downloaded the free trial of YNAB, and had the same question as yourself. This is what I found out — YOU CAN import data, but they don’t recommend it here is why:
“Why shouldn’t I import historical data from another program?
Although you can import all of your old Money/Quicken data into YNAB 3, we do not recommend importing historical data.
YNAB 3 works as a forward looking, spending and savings management plan for your money. As such, it is not concerned with vast amounts of imported history. Having access to that history as a matter of record may have value, but it’s more important to fully understand how YNAB works before loading in that much data.
The main reason for this is if you suddenly import years of data, you will have to go back to the earliest date of the imported data and budget each and every dollar for each month. Depending on the amount of historical data, that could be a daunting and tedious task.

Consider these points:

Historical transactions have little to no bearing on future plans. While spending trends can help you get started with your budget, it won’t be worth the trouble it will take to get them in place and in order.
Budgeting is all about categories and assigning dollars to jobs. If you import several months or years of un-categorized transactions then it will create a huge amount of work for you to categorize each and every transaction. If you choose not to categorize them then they will not reflect in the budget nor appear in any report.
As long as you can still open up your old software still then you are better off leaving the old files there for future reference.

Today is a new day! Start fresh by following our Getting Started directions and in no time at all you’ll have created new data.”

I’m here because of iBank. It’s glossy but completely ineffective. Its reporting is sub-par at best, and it’s budgeting engine is weak. iBank spent all of its time making a glossy mac-like interface and none of its time building a sound financial platform. Beware of iBank.

Paul- I could use your expertise…
I have given up on mint.com because it has difficulty connecting with my primary bank as well (it too is listed as a supported financial institution). I came across your blog when I was searching other options out there and, like many, this was the 1st I heard of YNAB. I must say I am VERY IMPRESSED with your reviews and knowledge of this product. I am currently working with my trial version of YNAB, while also playing with the Quicken Deluxe 2010. I LOVE the user friendliness and budgeting options of YNAB (which cannot be compared to the dull, overly-complicated QUicken)… However, I am still caught up on the “automatic bank sync”. If YNAB would sync with my bank it would be a done deal, no questions asked. I am more worried about my own user error when entering transactions and afraid I won’t catch an error- or if I DO catch the error, it would be a tedious headache to go back through my transactions to figure out what I did wrong. HOw do I “balance” what is importing/manual typed into YNAB to my bank to make sure they are matching up????? PLEASE HELP, I REALLY REALLY REALLY want to make YNAB work, and who better to ask than you!! And a more dumbed down explanation of YNAB’s “working balance” would be appreciated! THANKS!

Hi Michelle,
Maybe I can help at least on one question. On the account balance sheet on YNAB there are three numbers “Cleared Balance” “Uncleared Transactions” and “Working Balance” — the way YNAB explains balancing your account is to go through and click the “C” for cleared (it adds a big green C) for every transaction that has cleared. Once you have done this, the “Cleared Balance” should match your bank’s record of how much you have available. I have used the “Account Actions –> Set/Adjust Working Balance” to help bring my data in line with my bank — just adds or subtracts an amount to bring the cleared balance into harmony with whatever your bank data shows.

I can’t speak about the auto bank sync function, so will be interested in that answer. I love YNAB so far and am a fairly new user. Used to use Quicken. The YNAB people are so helpful, as I have contacted them and got a very kind reply. I suggest you really explore all their tutorials, help files, and if you don’t find your answer, contact them directly via their contact form.

I have a pc (mostly for work), a mac (w/snow leopard), and I get a serious case of just-shoot-me-now whenever I have to do the tax prep. Now that I have plunged into the working poor and the depression has eaten my retirement, I need to get a better handle on my finances. At least I need a fast, efficient way to produce tax info. Are The Fiscal Geek and You Need a Budget over my head?
Susan

Thanks SO much for the info. Timing is PERFECT that I came across your article and reviews. I signed up for the trial of YNAB & they’re offering a webinar tomorrow. So, it looks like it might be the choice.